Correlation Between EROAD and FireFly Metals
Can any of the company-specific risk be diversified away by investing in both EROAD and FireFly Metals at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining EROAD and FireFly Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EROAD and FireFly Metals, you can compare the effects of market volatilities on EROAD and FireFly Metals and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in EROAD with a short position of FireFly Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of EROAD and FireFly Metals.
Diversification Opportunities for EROAD and FireFly Metals
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between EROAD and FireFly is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding EROAD and FireFly Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FireFly Metals and EROAD is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on EROAD are associated (or correlated) with FireFly Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FireFly Metals has no effect on the direction of EROAD i.e., EROAD and FireFly Metals go up and down completely randomly.
Pair Corralation between EROAD and FireFly Metals
Assuming the 90 days trading horizon EROAD is expected to generate 1.09 times more return on investment than FireFly Metals. However, EROAD is 1.09 times more volatile than FireFly Metals. It trades about 0.01 of its potential returns per unit of risk. FireFly Metals is currently generating about 0.01 per unit of risk. If you would invest 100.00 in EROAD on October 30, 2024 and sell it today you would earn a total of 0.00 from holding EROAD or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
EROAD vs. FireFly Metals
Performance |
| Timeline |
| EROAD |
| FireFly Metals |
EROAD and FireFly Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EROAD and FireFly Metals
The main advantage of trading using opposite EROAD and FireFly Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EROAD position performs unexpectedly, FireFly Metals can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in FireFly Metals will offset losses from the drop in FireFly Metals' long position.| EROAD vs. Hudson Investment Group | EROAD vs. Black Rock Mining | EROAD vs. Truscott Mining Corp | EROAD vs. Super Retail Group |
| FireFly Metals vs. Spirit Telecom | FireFly Metals vs. Sky Metals | FireFly Metals vs. Hutchison Telecommunications | FireFly Metals vs. Farm Pride Foods |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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